Why TJ Maxx's Global Success Is The Envy Of All Retailers

The 2015 annual report of the TJX Companies says it all. Net sales for the past fiscal year were $29.1 Billion which is greater than Macy’s report of $28.1 Billion. In the past year sales increased 6.2% reflecting customer demand for value fashion. Comparable sales increased 2%. It is significant that in the fourth quarter net earnings jumped 15%. Today the TJX Companies Inc. is the leading off-price retailer of apparel and home fashions in the United States and world-wide.

In the United States the company’s stores are known by such popular names as T.J.Maxx, Marshalls, and HomeGoods. Recently a new concept, Sierra Trading Post was added. In Canada the names are Winners, HomeSense and Marshalls. In Europe the names are T.K.Maxx and HomeSense.

As an off-price retailer the company features brand-name merchandise at great values. Some of it is obtained through opportunistic buying after a season is over. The company sells fashion at substantially lower prices than department and specialty store regular prices. Because the company has an aggressive inventory management, assortments change quickly and customers have learned to buy what they like when they see it.

Similar to the department store customer, TJX’s customer profile is a 25 to 44 year old female customer with middle to upper-middle income. She is fashion and value conscious and cross-shops at high end department and specialty stores. She looks for fashion, brands, quality and price and enjoys the experience to hunt for “that special item.”

The company sources from more than 16,000 vendors. However, the top 25 vendors account for about 25% of all purchases. The company purchases merchandise in more than 75 countries.

TJX is truly a global company. Today TJX companies are in 6 countries with 3,395 units, and by the end of this year will be in 8 countries. The biggest market is, of course, the United States (2548 units) and Canada (370 units), but the company is growing in the United Kingdom, Ireland, Germany and Poland (Europe has a total of 440 units). This spring the company will add stores in Austria and later this year The Netherlands. In addition the company has three Internet sites which serve customers through effective presentations.

Off-price is very attractive to many shoppers. It is evident by the popularity of Nordstrom’s fast growing Rack stores – now 167 units achieving sales of $3.2 Billion; the 10 units of Neiman Marcus’ Last Call Studios; and the 40 units of Sacks Fifth Avenue’s Off Fifth Avenue. Macy’s has indicated that it will test, possibly this year, an off-price concept of its own.

Consumers clearly like off price retailing. It does not matter that the stores have a bare bones interior, are often located in “B” locations, and that some of the fine products are a year old when they are sold in an off-price store. This is all part of what keeps expenses down and prices low. What does matter is that the offering is unique, timely, attractive, and most importantly, a perceived value. TJX has the formula perfected. Other major retailers are taking note and they want a piece of the off-price action.